Dividend stocks, sought by many investors because they produce a steady stream of income, are typically more attractive to a broader swath of investors when the stock market is down or sputtering. That’s because while stock prices fluctuate, good dividends are constant and even increase, boosting the total return of the stock.
In fact, when times are tough, dividends have generated a higher percentage of the total return of the S&P 500. For example, in the 1970s, 73% of the total return of the S&P 500 came from dividends, while during the bull market during the 2010s, it was just 17%.
The bulls have largely been running the stock market over the past 18 months, but the near term in uncertain. Thus, it might be a good time to consider some good, stable dividend stocks to balance things out. Here are the three best dividend stocks to buy right now.
1. Nexstar Media Group: 4.17% yield
Nexstar Media (NASDAQ:NXST) owns more than 200 television stations and various networks, including the CW and Food Network. In fact, the company owns more TV stations than any other firm in the country.
Nexstar is coming off a quarter in which it posted record revenue and saw its earnings jump 90% on higher revenue, cost reductions and the sale of its Broadcast Music affiliate.
As such, Nexstar has been a tremendous dividend stock, having increased its dividend payments for 10 straight years. It is now paying out a $1.69-per-share dividend after boosting its dividend by 25% in the first quarter. The $1.69-per-share quarterly payout comes out to $6.76 per share annually for a yield of 4.17% with a payout ratio of 48%.
This should be a great year for Nexstar as it expects record ad spending in a presidential election year. It is trading at $163 per share and is up about 2% year to date (YTD) with a median price target of $207 per share.
This stock is flashing a buy signal right now for its dividend and return potential.
2. United Bankshares: 4.34% yield
United Bankshares (NASDAQ:UBSI) is a small regional bank with a big dividend. In fact, it recently earned Dividend-King status, marking 50 consecutive years of dividend increases in 2023.
The bank recently authorized a dividend of 37 cents per share at a yield of 4.34%, which is among the highest within its sector. Trading at just $34 per share, investors could load up on these shares and feel pretty secure that the bank will keep raising its dividend based on its track record.
United’s capital strength has allowed it to acquire Piedmont Bankshares based in Georgia, which will strengthen its presence in the Mid-Atlantic and Southeast regions of the U.S. After the deal closes in the fourth quarter, United will be the 39th-largest U.S. bank with $32 billion in assets and 240 branches in eight states and Washington, D.C.
The stock is viewed as a consensus buy among analysts with a media price target of $36.50 per share. This latest deal should strengthen United in a fractured regional-banking market.
3. Verizon Communications: 6.71% yield
Verizon Communications (NYSE:VZ), the nation’s second-largest wireless carrier, has had a choppy 10 years, with its share price wobbling right around flat.
However, its dividend has remained strong through it all. In fact, Verizon has managed to increase its dividend for 19 consecutive years, and it currently pays out a dividend of 67 cents per share at a yield of 6.71%.
That is one of the highest dividend yields on the entire market, and it appears to be manageable right now with a payout ratio of around 56%. The payout ratio is the percentage of earnings that go to pay the dividend, and anything in the 50% range or lower is generally considered pretty good.
Verizon also enjoys some momentum, as it saw a slight increase in operating revenue in the first quarter and a 3.3% rise in wireless service revenue. Further, the company increased its free cash flow to $2.7 billion from $2.3 billion in the same quarter a year ago, which is a critical metric for maintaining its dividend.
It was also revealed that both Verizon and T-Mobile are in talks to acquire pieces of U.S. Cellular, a strong regional carrier, with each company buying their own parts of the company in separate transactions. This deal could increase Verizon’s market share if it goes through.
Verizon stock is up by about 3% YTD to $40 per share and has a median price target of $45.50 per share, so analysts expect growth.
If you are worried about the markets and want some solid dividend stocks to bolster your portfolio, these are three excellent options.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
